Recent Posts

About

Did your roof collapse under the heavy weight of the snow? Did lightning strike your guest house? You probably know that insurance can protect your home and possessions during damaging weather (which we've had a lot of this year), but did you know that you may claim tax deductions for weather damage?

Here are some key points that came out of a recent conversation with the IRS.Weather-Related Damages Must Meet the Definition of a Casualty Loss

As long as the weather-related damage meets the definition of a casualty loss -- which is something that happens suddenly and unexpectedly as opposed to something that happens gradually -- you can take the deduction. In other words, a roof that collapses because of heavy snow would meet the definition of a casualty; slow, gradual water seepage in a basement would not.

Determine the Loss Amount

Here's where it can get complicated. You have to know the Fair Market Value of your property before and immediately after the casualty (what a willing buyer would pay for it) as well as the Adjusted Cost Basis (property cost plus capital improvements, minus depreciation and other factors). Take whichever amount is lower, subtract insurance or other reimbursements received or expected to be received. Then subtract another $100 for each casualty that occurred during the year (the $100 rule, per IRS) and reduce the loss again by 10% of your adjusted gross income.

File Form 4684

Report the loss on Form 4684 (You can download this from irs.gov), and take it as an itemized deduction on your Schedule A. The IRS tells me that you do not have to provide any additional documentation -- such as photos or videos of the storm-induced damage -- but that you should always have this information filed away for backup purposes.

Take the Loss in the Year the Casualty Occurred

Casualty losses are deductible in the year in which they occurred -- unless the loss happens in a federally declared disaster area. In which case, you can elect to take the loss in the preceding year, submitting an amended return if you've already filed.

Intro to different retirement accounts

TurboTax Articles

Common lifestyle changes, like getting a job or getting married, can change your tax liability. To avoid being caught off guard by an unexpected tax bill or huge tax refund, you'll need to adjust your withholdings on your paycheck.

If you're a homeowner, you probably qualify for a deduction on your home mortgage interest. The tax deduction also applies if you pay interest on a condominium, cooperative, mobile home, boat or recreational vehicle used as a residence.